Written judgment says phone calls and links with Fortis official ‘cast shadow of doubt’
Neil Gough, Enoch Yiu and Frederick Yeung 12 May 2009
The Court of Appeal yesterday questioned the truthfulness of Pacific Century Regional Developments (PCRD) deputy chairman Francis Yuen Tin-fan’s testimony regarding his firm’s aborted HK$15.93 billion buyout bid for PCCW.
The court’s written judgment found a series of telephone calls and other links between Mr. Yuen and Fortis Insurance Asia regional director Inneo Lam Hau-wah had “cast a shadow of doubt over whether and to what extent Mr. Yuen had influenced or was involved in” the alleged vote-rigging scheme to boost support at a February 4 shareholders’ meeting that approved PCCW’s privatisation.
The Securities and Futures Commission had accused Mr. Lam of splitting his PCCW shares among 500 Fortis agents and others in early January in an attempt to manipulate support for the buyout under the “headcount rule”, which requires approval from 50 per cent of voting shareholders by number.
Mr. Yuen, the right-hand man to PCCW and PCRD chairman Richard Li Tzar-kai and a former chief executive of the stock exchange, had said he only learned of Mr. Lam’s actions by reading an affidavit given by SFC executive director of enforcement Mark Steward on March 17.
“I find it impossible to say that Mr. Yuen’s statement ... has the ring of truth,” Mr. Justice Anthony Rogers wrote yesterday on behalf of the three-judge appellate panel.
The court had previously heard how Mr. Lam and Mr. Yuen exchanged nine telephone calls and several text messages in the six weeks to February 4. That included five calls on January 5 - the day Mr. Lam bought the PCCW shares in question.
In January, Mr. Lam’s secretary, who is also his sister, acquired 500 to 600 proxy voting forms from Mr. Yuen’s secretary at PCRD.
“The fact that the forms were obtained from the secretary of the deputy chairman of the company instigating the privatisation ... can only raise suspicion of complicity,” the justices wrote.
Mr. Lam said the shares were distributed as bonuses and denied discussing PCCW’s privatisation with Mr. Yuen, a version of events the SFC’s lawyer had told the court was “strikingly contrary to probabilities”.
Fortis Insurance Asia said yesterday it had terminated its principal-agent relationship with Mr. Lam.
The SFC yesterday said the appeal court made it clear share splitting for the purpose of manipulating the outcome of a vote was a form of abuse.
“This judgment makes it clear that share splitting in this context is a form of vote manipulation, and the results of shareholder meetings achieved by manipulative devices may be struck down by the court,” the SFC’s chief executive, Martin Wheatley, said.
Mr. Yuen declined to comment last night, saying: “We are still studying the judgment. We will let the lawyers examine it before deciding what to do next.”
The judgment recounted testimony from Mr. Yuen regarding a January 31 telephone call he placed to Mr. Lam after an article in Ming Pao broke news of the involvement of Fortis agents in the share-splitting plan, which had earlier been reported to the SFC and the Independent Commission Against Corruption by shareholder activist David Webb. Mr. Yuen said he called Mr. Lam after reading the article to find out more, but their conversation ended after he received assurances from Mr. Lam that no “improper activities” had taken place.
“It strains the imagination too much to accept that someone, in respect of whom it was undoubtedly being implied in the press that there was involvement in underhand, if not illegal, conduct that had been reported to the ICAC as well as the SFC, should leave the conversation in the way he said he did,” the court said.
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Yuen’s truthfulness questioned by court
Written judgment says phone calls and links with Fortis official ‘cast shadow of doubt’
Neil Gough, Enoch Yiu and Frederick Yeung
12 May 2009
The Court of Appeal yesterday questioned the truthfulness of Pacific Century Regional Developments (PCRD) deputy chairman Francis Yuen Tin-fan’s testimony regarding his firm’s aborted HK$15.93 billion buyout bid for PCCW.
The court’s written judgment found a series of telephone calls and other links between Mr. Yuen and Fortis Insurance Asia regional director Inneo Lam Hau-wah had “cast a shadow of doubt over whether and to what extent Mr. Yuen had influenced or was involved in” the alleged vote-rigging scheme to boost support at a February 4 shareholders’ meeting that approved PCCW’s privatisation.
The Securities and Futures Commission had accused Mr. Lam of splitting his PCCW shares among 500 Fortis agents and others in early January in an attempt to manipulate support for the buyout under the “headcount rule”, which requires approval from 50 per cent of voting shareholders by number.
Mr. Yuen, the right-hand man to PCCW and PCRD chairman Richard Li Tzar-kai and a former chief executive of the stock exchange, had said he only learned of Mr. Lam’s actions by reading an affidavit given by SFC executive director of enforcement Mark Steward on March 17.
“I find it impossible to say that Mr. Yuen’s statement ... has the ring of truth,” Mr. Justice Anthony Rogers wrote yesterday on behalf of the three-judge appellate panel.
The court had previously heard how Mr. Lam and Mr. Yuen exchanged nine telephone calls and several text messages in the six weeks to February 4. That included five calls on January 5 - the day Mr. Lam bought the PCCW shares in question.
In January, Mr. Lam’s secretary, who is also his sister, acquired 500 to 600 proxy voting forms from Mr. Yuen’s secretary at PCRD.
“The fact that the forms were obtained from the secretary of the deputy chairman of the company instigating the privatisation ... can only raise suspicion of complicity,” the justices wrote.
Mr. Lam said the shares were distributed as bonuses and denied discussing PCCW’s privatisation with Mr. Yuen, a version of events the SFC’s lawyer had told the court was “strikingly contrary to probabilities”.
Fortis Insurance Asia said yesterday it had terminated its principal-agent relationship with Mr. Lam.
The SFC yesterday said the appeal court made it clear share splitting for the purpose of manipulating the outcome of a vote was a form of abuse.
“This judgment makes it clear that share splitting in this context is a form of vote manipulation, and the results of shareholder meetings achieved by manipulative devices may be struck down by the court,” the SFC’s chief executive, Martin Wheatley, said.
Mr. Yuen declined to comment last night, saying: “We are still studying the judgment. We will let the lawyers examine it before deciding what to do next.”
The judgment recounted testimony from Mr. Yuen regarding a January 31 telephone call he placed to Mr. Lam after an article in Ming Pao broke news of the involvement of Fortis agents in the share-splitting plan, which had earlier been reported to the SFC and the Independent Commission Against Corruption by shareholder activist David Webb. Mr. Yuen said he called Mr. Lam after reading the article to find out more, but their conversation ended after he received assurances from Mr. Lam that no “improper activities” had taken place.
“It strains the imagination too much to accept that someone, in respect of whom it was undoubtedly being implied in the press that there was involvement in underhand, if not illegal, conduct that had been reported to the ICAC as well as the SFC, should leave the conversation in the way he said he did,” the court said.
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